Bill Gross of PIMCO has retained his title as “The Bond King” even if he had to take a lot of heat over his “Death of the Cult of Equities.” In his April 2013 investment outlook titled “A Man in the Mirror” Gross questions what makes a great investor through time. He questions whether or not he nor even Warren Buffett should qualify despite the years of a track record. We would tell readers that there are few controversial takes on the market outlook, but at the same time Mr. Gross addresses whether or not he and others who are considered great investors are really so great through time.
Mr, Gross said, “Investing and the success at it are predominately viewed on a cyclical or even a secular basis, yet even that longer term time frame may be too short. Whether a tops-down or bottoms-up investor in bonds, stocks, or private equity, the standard analysis tends to judge an investor or his firm on the basis of how the bullish or bearish aspects of the cycle were managed. Go to cash at the right time? Buy growth stocks at the bottom? Extend duration when yields were peaking? Buy value stocks at the right price? Whatever.”
There is even an admission about the Bond King title, while discussing whether anyone should be considered the king of their asset class. Gross said, “But let me admit something. There is not a Bond King or a Stock King or an Investor Sovereign alive that can claim title to a throne. All of us, even the old guys like Buffett, Soros, Fuss, yeah – me too, have cut our teeth during perhaps a most advantageous period of time, the most attractive epoch, that an investor could experience.”
The new epoch is one where credit might not expand. Gross points out that his growth as well as Warren Buffett, Peter Lynch, and others have all become major successes at an unprecedented credit expansion. Gross goes on to admit that what will be very impressive is who makes their marks after that credit epoch change.
As far as how Mr. Gross ranks himself, he said after looking in the mirror that it is at least a 7 (out of 10). This may have sounded self-serving on his part, but all in all it seems more humility than hubris.